Presented by: Teoman Duman
27 Nov. 2010
MARKETING MANAGEMENT BY KOTLER AND KELLER (12TH ED.)
LECTURE NOTES
Chapter 10. CRAFTING THE BRAND POSITIONING
This chapter explores specific ways a company can effectively position and differentiate its offerings to achieve a
competitive advantage throughout the life cycle of an offering.

Developing and Communicating a Positioning Strategy;
 All marketing strategy is built on Segmentation, Targeting and Positioning
 Positioning is the act of designing the company’s offering and image to occupy a distinctive place in
the mind of the target market. Table 10.1 shows how three companies defined their value position given
their target costumers, benefit and prices.
TABLE 10.1 Examples of Value Propositions Demand States and Marketing Tasks
Company and
Product
Perdue (chicken)
Volvo (station
wagon)
Domino's (pizza)
Target Customers
Benefits
Price
Value Proposition
Quality-conscious
consumers of chicken
Safety-conscious
"upscale" families
Convenience-minded
pizza lovers
Tenderness
10%
premium
20%
premium
15%
premium
More tender golden chicken at a moderate
premium price
The safest, most durable wagon in which
your family can ride
A good hot pizza, delivered to
your door within 30 minutes of ordering, at
a moderate price
Durability and
safety
Delivery speed and
good quality
Competitive Frame of Reference;
 A starting point in defining a competitive frame of reference for a brand positioning is to determine
category membership—the products or sets of products with which a brand competes and which
function as close substitutes. In the United Kingdom, for example, the Automobile Association has
positioned itself as the fourth "emergency service"—along with police, fire, and ambulance—to convey
greater credibility and urgency.
 Points-of-Parity and Points-of-Difference
o Points-of-difference (PODs) are attributes or benefits consumers strongly associate with a
brand, positively evaluate, and believe that they could not find to the same extent with a
competitive brand. Strong, favorable, and unique brand associations that make up points-ofdifference may be based on virtually any type of attribute or benefit. Examples are FedEx
{guaranteed overnight delivery), Nike {performance), and Lexus {quality).
o Points-of-parity (POPs), on the other hand, are associations that are not necessarily unique to
the brand but may in fact be shared with other brands.
Establishing Category Membership:
 Marketers must inform consumers of a brand's category membership. Perhaps the most obvious
situation is the introduction of new products, especially when the category membership is not apparent.
(cosmetics as Maybelline, consulting firm as Accenture, digital cameras as Sony, Olympic and
Kodak…).
 Three main ways to convey a brand’s category membership:
 Announcing category benefit: fundamental reason for using a category
 Comparing to exemplars: well-known, noteworthy brands in a category can also be used
to specify category membership.
 Relying on the product descriptor – creating a new description for a product.
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 Choosing POPs and PODs: Two important considerations are that consumers find the POD desirable
and that the firm has the capabilities to deliver on the POD.
 There are three key consumer desirability criteria for PODs
 Relevance: target consumers must find the POD personally relevant and important
 Distinctiveness: target consumers must find the POD distinctive and superior
 Believability: target consumers must find the POD believable and credible
 There are three key deliverability criteria
 Feasibility: The firm must be able to create the POD. The product design and marketing
offering must support the desired association.
 Communicability: Consumer must be given understandable rationale and reason as to why
the brand can deliver the desired benefit.
 Sustainability: It depends on internal commitment and use of resources as well as external
market forces.

Differentiation Strategies
Marketers must start with the belief that anything can be differentiated and brands can be differentiated on the
basis of many variables. Among the other dimensions a company can use to differentiate its market offering are
product, personnel, channel, and image.
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Product differentiation (Noisier lawnmovers are more stronger!)
Personal differentiation (Singapore Airlines flight attendants)
Channel differentiation (i.e. Channel coverage, experience, performance)
Image differentiation (Identity – how the firm defines itself; image – how people perceive the firm Peabody Hotels Ducks)
Product Life-Cycle (PLC)
 To say that a product has a life cycle should assert four things
 Has a limited life
 Sales pass through distinct stages each posing different challenges, opportunities and problems to
the seller
 Profits rise and fall at different stages of PLC
 Products require different marketing, financial, purchasing and human resources strategies in each
life cycle stage
 Product Life Cycle
 Most PLC curves are as bell-shaped this curve is divided into four stages;
 Introduction: a period of slow sales growth as the product is introduced in the market
 Growth: a period of rapid market acceptance and profit improvement
 Maturity: a slowdown in sales growth because the product has achieved acceptance by
most potential buyers. Profits stabilize or decline because of increased competition.
 Decline: sales show a downward drift and profits erode.
 Style, Fashion, and Fad Life Cycle (Special categories and PLC)
 Style is a basic and distinctive mode of expression appearing in a field of human endeavor;
style can last for generations and go in and out of vague. (Housing styles, clothing styles
(formal wear etc.).
 Fashion is a currently accepted or popular style. The length of a fashion cycle is hard to
predict. (Using larger cars, wearing jeans etc.)
 Fads are fashions that come quickly into public view and adopted with great zeal, peak early
and decline very fast. Attract only those who are searching for excitement or want to
distinguish themselves from others.(Computer games, music etc.)
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 Marketing Strategies
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Introduction stage and the Pioneer Advantage
 Introduction stage: Low sales growth, negative or low profits, promotional expenditures at
highest ratio.
 Pioneer Advantage; Most studies indicate that the market pioneer gains the most advantage.
To be first can be rewarding, but risky and expensive. To come in later makes sense if the firm
can bring superior technology, quality or brand strength. 19 of 25 companies who were market
leaders in 1923 were still the market leaders in 1983.
 Distinguishing between inventor - first to develop patents in a new product category, product
pioneer- first to develop a working model, and market pioneer - first to sell in the new
product category.
 Pioneers should know when and how to initiate products and enter markets.
Growth stage
 The growth stage is marked by a rapid climb in sales. Early adopters like the product. New
consumers start buying it and new competitors enter into the market.
 During this stage, firms use several strategies to sustain rapid market growth:
 improve product quality
 add new models
 enter new market segments
 increase distribution coverage
 shift from product-awareness advertising to product-preference advertising
 lower prices
 Firms in the growth stage face a trade-off between high market share and high current profit.
 Maturity Stage
 At some point the rate of sales growth will slow
 This stage normally lasts longer than the previous one and poses big challenges to marketing
management.
 The sales slowdown creates overcapacity in the industry. Competitors try to find niches,
increase advertising and consumer promotions, develop product improvements, shakeout
begins and weaker competitors withdraw.
 A few giant firms usually dominate the industry: a quality leader, a service leader, and a cost
leader.
 The issue facing a firm in a mature market is whether to struggle to become one of the “Big
three” and achieve profits through high volume and low cost, or to pursue a niching strategy
and achieve profits through low volume and a high margin.
 Market Modification in Maturity Stage
 A company might try to expand the market for its mature brand
 Number of brand users could be expanded by converting nonusers, entering in new market
segments, winning competitors’ customers.
 Usage rate could be increased by convincing users to increase their brand usage through; using
the product in more occasions, using more of the product on each occasion, using the product
in new ways
 See the case study of AARP, the American Association for Retired Persons

Product Modification in Maturity Stage : Managers can also try to stimulate sales by modifying
product’s characteristics through:
 Quality improvement (new, stronger, bigger, better, fresher)
 Feature improvement (size, weight, materials, additives, accessories)
 Style improvement (aims to increase the product’s aesthetic appeal)
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Marketing Program Modification;
 Product managers might also try to stimulate sales by modifying other marketing program
elements - prices, distribution, advertising, sales promotion, personal selling, services.
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 Decline Stage
 Sales decline for a number of reasons
 Technological advances
 Shifting consumer tastes
 Increased domestic and foreign competition
 The decline might be slow as in the case of sewing machines, or rapid as in 5.25 floppy disks
 Some firms withdraw from the market and those remaining may reduce product, withdraw
from smaller segments, cut their promotion budget, and reduce prices.
 Five strategies in declining industries include:
 Increasing the firm’s investment to dominate the market or strengthen its competitive
position.
 Maintaining the firm’s investment level until the uncertainties are solved.
 Decreasing the firm’s investment level selectively by dropping unprofitable customer
groups, while strengthening the firm’s investment in niches.
 Harvesting (milking) the firm’s investment to recover cash quickly.
 Divesting the business quickly by disposing of its assets.
 The appropriate strategy depends on:
 The industry’s relative attractiveness
 The company’s competitive strength in that industry
 Case study: Pitney Bowes managers predicted that faxes would kill regular mail, e-mail would
kill faxes and that all these technological advances combined would kill Pitney’s profits. Its
slogan became “Engineering the flow of communication”.
 The Product Life-Cycle Concept - Critique
 PLC concept helps marketers to interpret product and market dynamics, planning and control.
It is useful as a forecasting tool.
 Critics argue that marketers can seldom tell what stage the product is in.
 It also focuses on what is happening to a particular product or brand rather than on what is
happening to the overall market - a product oriented rather than a market oriented approach.
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